Infinity CLAMM & LBAMM

🔷 CLAMM (Concentrated Liquidity AMM)

CLAMM enables liquidity providers to allocate their capital within specific price ranges. This leads to:

• Higher capital efficiency: More liquidity at active trading prices.
• Deeper liquidity: Better execution for traders.
• Active LP management: LPs need to adjust positions as prices move.
• Higher impermanent loss potential for out-of-range positions.

Note

CLAMM operates on the constant product formula (X * Y = K). Each liquidity position is non-fungible and represented as an NFT.

🔷 LBAMM (Liquidity Book AMM or “Bin Pool”)

LBAMM implements discrete price bins, each holding liquidity at a specific price level. LBAMM follows the constant sum formula (X + Y = K).

Key characteristics:

• 0 price impact trades within a bin.
• Fungible liquidity (liquidity within each bin is an ERC-20 token).
• Lower gas costs for adjusting LP positions.
• Support for different liquidity shapes (e.g., skewed, uniform).
• More suitable for low volatility pairs due to the flat pricing curve per bin.

🥞 PancakeSwap is the first protocol to offer LBAMM pools with hooks.

Tip

Both CLAMM and LBAMM pools support hooks, which allow developers to customize pool behavior. Pool types are extendable via new Pool Managers, which can be added without protocol redeployment.

Feature	CLAMM	LBAMM
Pricing Curve	Constant Product (X * Y = K)	Constant Sum (X + Y = K)
Liquidity Token	Non-fungible (NFT)	Fungible (ERC-20 per bin)
Best For	Both high/low volatility pairs	Low volatility pairs
Advantages	Capital efficiency Gas efficient in wide/full range Widely adopted	0 price impact within bin Cheaper LP management Flexible liquidity shapes
Hook Support	✅	✅

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🧮 Fees

PancakeSwap Infinity supports a flexible and extensible fee system through Static and Dynamic fee settings. This setup gives both pool creators and LPs powerful tools to optimize for different trading strategies and risk profiles.

🔁 Dynamic Fees

• Dynamic Fees are determined in real-time via hook contracts.
• These fees can fluctuate based on external factors such as volatility, trading volume, user status (e.g., CAKE holdings), or any custom logic coded into the hook.
• Pools with dynamic fees must enable the setting at the time of pool creation and attach a hook capable of modifying fees via beforeSwap.
• Once a pool is initialized, the fee type (dynamic or static) is immutable.

Dynamic fees offer maximum flexibility and optimize fee structures for both LPs and swappers based on market conditions.

📌 Static Fees

• Static Fee pools have a fixed fee set during pool creation.
• These fees cannot be changed after the pool is initialized.
• Suitable for simpler use cases or where predictability of fee structure is important.
  

🔒 Max Fee Caps:

• CLAMM Pools: Up to 100% (mostly for specialized or experimental use cases)
• LBAMM Pools: Capped at 10%
  

🏛 Protocol Fee (for static fee pools):

• PancakeSwap applies a protocol fee on Infinity pools
• 33% of LP fee, capped at 0.4%

LP Fee	Protocol Fee
1%	0.33%
2%	0.4% (capped)
Dynamic Fee Pool	0.03% (current default)

🛠️ Setup Notes for Pool Creators

• When initializing a pool via PoolManager, the creator must choose:
  • Whether the pool uses a static or dynamic fee
  • Whether a hook contract is attached (required for dynamic fees)

These settings are permanent and define how the pool behaves throughout its lifetime.